SOW_Fraud_Referral_and_Analysis.pdf

Statement of Work

Support Services for Fraud Referral and Analysis

1.0 Background

The Department of Education (DoED) Office of Inspector General (OIG) refers to Federal Student Aid

(FSA) for further analysis and action certain complaints processed through OIG Hotline Operations as well as certain cases of suspected fraud identified internally from OIG’s E-Fraud Model. FSA has a sustained requirement for professional services in support of the ongoing development and operation of processes to intake, analyze, and work each fraud referral through resolution or disposition.

E-Fraud Model-based Referrals

In January 2014 the DoED OIG began providing FSA with suspected fraud ring cases identified using the OIG data analytics E-Fraud Model. On a monthly basis, the FSA Enterprise Data Office (EDO) and

Finance Office (FO)/Internal Control Group (ICG) are provided referrals for further review and analysis.

Historically, these referrals have identified specific individuals and include the individual’s name, social security number (SSN), mailing and email addresses, phone number, school identification data, and an explanation of how they were identified for review. The OIG also provided one additional case, referred to as the United Parcel Service (UPS) case, which was similar to an E-Fraud Model case, to FSA for review and analysis.

OIG Hotline Complaint Referrals

The OIG also provides FSA various OIG Hotline complaint-based referrals from schools and individuals via a hotline portal. Approximately weekly, OIG hotline referrals that do not meet the OIG threshold for investigation are sent to FSA for review and analysis. Various FSA offices including EDO, FO, Program

Compliance (PC)/School Eligibility Service Group (SESG), Business Operations, Customer Experience

(CE)/Application Processing Division (APD) and the Ombudsman are typically involved in processing these referrals. The content and form of these referral varies and often includes large data sets such as student applications, school system data, institutional student information records (ISIR), review notes, and customer service line audio files.

Fraud Group

Due to an increase in the number of OIG E-Fraud model and hotline referrals received from OIG, in

November 2014 FO began coordinating with FSA stakeholders to identify a single central location and a streamlined process for fraud referral intake and review. In May 2015, FSA established the FSA Fraud

Group (FG) to manage the intake and analysis of OIG fraud referrals, to coordinate with FSA stakeholder offices to determine the disposition of fraud referrals; and to recommend enhancements to internal controls and the fraud prevention and detection processes.

As of June 132016, the OIG sent 442 E-Fraud referrals involving 83 cases to FSA for review and analysis.

As of June 13 2016, one UPS case has been received and included 21 referrals.

As of June 13 2016, the OIG sent 25,364 Hotline referrals involving 427 cases to FSA for review and analysis.

FSA FG has since implemented referral intake, review and disposition processes. It continues to refine these processes, and performs follow-up activities with the OIG, schools and FSA system owners to obtain additional information needed to process referrals, e.g., missing SSNs, disbursement data, reasons for referrals, OIG analyst note clarifications.

Additionally, FG has implemented a methodology to score referrals. This methodology scores each referral based on a set of weighted criteria and tolerance levels. Criteria are weighed based on the level of severity of potential fraud indicators. Based on its score, each referral is categorized as Tier 1, Tier 2, Tier

3 or Tier 4 to consistently determine an initial disposition recommendation for each referral.

FSA is currently developing procedures to vet initial FSA FG referral dispositions to determine a final disposition and next steps, i.e., final disposition activities. Final disposition activities may include:

1) a fraud referral being referred back to the OIG for further investigation;

2) coordination with SESG to request the school research the case and, as applicable, to record an overpayment to recover any funds improperly disbursed;

3) coordination with the school to obtain additional referral information to determine if a refund of funds should be created; and

4) adding the name and SSN of the referral to FSA suspect identity file (SIF) to perform verification procedures.

Insights obtained from the analysis of referrals will allow FSA to better understand potential vulnerabilities in controls and current trends for potential fraud. This work will help determine if existing

FSA preventive controls such as “front end” Free Application for Federal Student Aid (FAFSA) edits in the Central Processing System (CPS) and school verification requirements may be improved.

2.0 Work Scope

The full scope of this requirement entails providing professional support services for the completion of the build out of the FSA framework for processing OIG referrals, a continuation of operations within this framework working each referral in the pipeline and any new referrals to conclusion (or to an agreed-upon status), and over time collaboration on ways to improve the framework and related processes, implementation of such improvements, and to recommend and support implementation of improvements to underlying controls within FSA or at schools that prevent and detect potential fraud. Operations include collaboration with other FSA offices to obtain additional relevant data from FSA systems and directly from schools, the review and analysis of these data sets to develop and execute disposition recommendations, and the disposal of referral actions in progress.

The contractor shall perform services in support of the FSA program office for the following three tasks and submit the associated deliverables described below:

Task #1 –Research and Analyze OIG Referrals, Recommend Next Steps for Identified Potential

Fraud, and Coordinate Disposition of Individual Referrals

Work

Description

Perform FSA research and analysis support activities of OIG fraud referrals.

For OIG Hotline referrals from schools or individuals:

Identify and record names, SSNs, and referral reason(s) for involved individuals provided in the referral.

Work with FSA EDO to obtain relevant Enterprise Data Warehouse and Analytics

(EDWA) data and other stakeholder offices if/as applicable to obtain relevant data directly from the operational systems, to include the CPS, the Common Origination and

Disbursement (COD) system, loan servicing systems, and the National Student Loan

Database System (NSLDS), etc. Relevant data may include, but is not limited to full

SSNs, school verification information used to confirm identity or determine eligibility, grade progression or satisfactory academic progress, enrollment history, award and disbursement history, notable flag information (i.e., CPS edit check results), direct deposit information, etc..

Work with schools to obtain SSNs and referral reason if not provided in the initial referral submission

For OIG referrals from the E-Fraud Model:

Identify and record names, SSNs and OIG Analyst note information provided in the referral.

Work with FSA system owners to obtain verification information, grade progression, enrollment history, award information, and notable flag information.

This data may be available from the following FSA systems: EDWA, COD, CPS, and

NSLDS.

For both types of referrals:

Use the above input to categorize each referral with an initial disposition (e.g., as ‘Tier

1”, “Tier 2”, “Tier 3” or “Tier 4”) and recommend next steps for final disposition activities by tier.

For referrals at a higher risk for fraudulent activity (i.e., “Tier 1” or “Tier 2” referral) or that may require additional research and analysis (i.e., “Tier 3”):

Work with involved FSA Stakeholder Offices, (e.g., CE/APD, FO/ICG, PC/SESG, Policy and Liaison Implementation (PLI), Risk Management, the Ombudsman Group), to help determine and initiate final disposition activities as agreed to by the FSA Stakeholder

Offices.

Support the execution of these final disposition activities, which may include further communication with schools to obtain other required data to recover improper payments or other actions, and further coordination with EDWA and CPS system owners to add referrals to the SIF.

Deliverables Deliverable #1: OIG E-Fraud Model Referral Workbook. Contractor shall deliver a monthly

Microsoft Excel workbook that contains the following information for each referral received from the OIG E-Fraud Model: data included in the original referral received plus other data collected from FSA data sources or from the school (e.g., Name, SSN, disbursement data, etc.), analysis or other activities performed (e.g., identification and weighting of risk factors), referral tier, and recommended dispositions. Workbook is updated to include any additional information and disposition updates.

Deliverable #2: Other OIG Referrals Inventory Workbook. Contractor shall deliver a monthly Microsoft Excel workbook containing the following information for each OIG hotline or other referral: data included in the original referral received plus other data collected from FSA data sources or from the school (e.g., Name, SSN, disbursement data, etc.), analysis or other activities performed, referral tier, and recommended dispositions recommendations. If Hotline referrals from schools do not define SSNs, further research

(internally or externally reaching out to the schools) may be required to obtain this data.

Workbook is updated to include any additional information and disposition updates.

Deliverables #1A and 2A: Summary Analysis Workbook(s) and Report(s) for Deliverables #1 and #2. Contractor shall deliver a monthly summary analysis that includes at a minimum identified potential fraud indicators, trends and other insights. Information within these deliverables may provide insights on how to improve controls and data collection, if applicable, which are documented within Deliverable 4 (described below).

In the current process, Microsoft Office products (e.g., Excel) are used to document referrals received and analysis performed. Long term, we will look to the contractor to help identify and evaluate alternative solutions to include leveraging existing FSA platforms (e.g., the Enterprise

Complaint System [ECS] or EDWA) for this purpose.

The contractor shall coordinate with both EDO and FO to ensure the format of monthly submissions facilitates the posting of individuals identified in the referrals to the CPS SIF and that the submissions are complete for this purpose. Likewise, the contractor will coordinate with EDO and FO to ensure the monthly submissions facilitate review and use in EDO’s fraud analytics model.

Additional

Information

1) The cohorts of referrals in the column “3. Initial Disposition Recommended” and “4. Final

Disposition Recommended” statuses as of 9/6/2016 will be processed through to completion achieving a “5. Final Disposition Activities Completed” status. This will allow for the final build-out of remaining processes and activities and the resolution of initial-run issues, demonstrating stable processes. We anticipate the duration to complete these activities for the initial cohort to be 10.3 months.

2) The cohorts of referrals in the “1. Initial Intake and Analysis” and “2. Follow-up and Second

Analysis, if Needed” statuses as of 9/6/2016 will continue to be processed with available resources, but the focus is on completion of referrals in the later statuses. For example, these column 1 and 2 status referrals may we worked while waiting on responses from schools related to the column 3 and 4 status referrals. Likewise, new referrals received may be worked with available resources.

Task #2 – Recommend Next Steps for Potential Fraud

The contractor shall perform the following tasks:

Support FSA efforts to continue building out and maintaining processes to effectively and efficiently process and resolve fraud referrals.

Deliverables Deliverable #3: Roadmap for OIG Referral Next Steps with Related Project Schedule. Describe recommendations for next steps for referrals received and the fraud referral program, including details on action items, responsible parties and timelines required to establish a sound control environment as it relates to fraud referrals. Prepare a project schedule, using Microsoft Project software, showing activities to the appropriate work breakdown structure (WBS), key milestones and outputs (e.g., deliverables #4 and #5) and associated start and completion dates.

Deliverable #3A: The contractor shall provide bi-weekly an updated current schedule, edit to reflect activities completed and approved changes. The contractor shall provide monthly status reporting, to include metrics on the number of referrals received, in process, and worked to final disposition, and metrics on the outcomes obtained.

Task #3 – Process and Control Improvements

Work with FSA to recommend process improvements and, if approved, update the content of the ‘FSA Processes for OIG Fraud Referrals’ document accordingly.

Assist the FSA PM in coordinating with other stakeholders to implement process improvements for the intake, review and disposition of fraud referrals.

Coordinate with these stakeholders to identify and help implement control improvements to better prevent or detect fraud and to address risks identified from the analysis of referrals, including, but not limited to, implementing new or modifying existing system edits, matches and/or business rules.

Deliverables Deliverable #4: Updated FSA Processes for OIG Fraud Referrals Document. This deliverable incorporates FSA-approved fraud referral process updates and improvements into the existing

‘FSA Processes for OIG Fraud Referral’ document.

Deliverable #5: Control Enhancements. The content of this deliverable describes the service provider’s recommendations for new controls or enhancements to existing controls within the student aid lifecycle (e.g., new front edits or matches within FSA systems such as CPS, COD, NSLDS, etc. to verify eligibility; analytical procedures using EDWA data sets; expanded verification requirements for schools; etc.) based on or derived from the analysis of fraud referrals.

The deliverable shall describe the activities to be performed to coordinate the design and implementation of control enhancements, identifying the various involved and interested stakeholders.

2.1 Deliverable Schedule

Task Number

Deliverable

Number (#) Deliverable Title

Invoice Submission*

Frequency

# 1 and #1A OIG E-Fraud Model

Referral Workbooks

Monthly

# 2 and #2A Other OIG Referrals

Inventory Workbooks

Monthly

#3 Roadmap for OIG Referral Next Steps with

Related Project Schedule

30 days after date of award

#3A Updated Project Schedule;

Status and Metric reporting

Monthly

#4 Updated FSA Processes for OIG Fraud

Referrals’ Document

Based on Deliverable #3

#5 Control Enhancements Based on Deliverable #3

*Invoice(s) shall not be submitted until the Contracting Officer (CO) has accepted the deliverable.

CO acceptance email(s) shall be attached to invoice submission(s).

a. Deliverables shall be delivered via email, during the frequencies specified, to the Contracting

Officer’s Representative (COR) and CO, with a ‘cc’ to the FSA Project Manager (PM).

b. Upon receipt, the involved FSA PM or their designee will review each deliverable for completeness, clarity, relevancy, accuracy, and consistency. Within 5 business days of submission, FSA will either request an extension to complete the deliverable review or accept or reject, for reasons provided within the deliverable or email response. If rejected, the contractor shall revise and re-submit the deliverable within 5 business days. To help facilitate deliverable acceptance and avoid potential re-work, the contractor shall schedule routine checkpoints with the involved PM to provide early insights into deliverable formats, content and direction, so FSA can provide early notification about required deliverable revisions.

3.0 Other

a. The FSA COR will serve as the primary point of contact on technical direction and oversight matters. If available, within a reasonable timeframe, FSA shall provide the internal data requested.

b. The contractor shall furnish the resources and materials required to satisfy the requirements described in this statement of work.

c. Contractor generated preliminary and final deliverables, all associated working papers, and other material the Department deems relevant in the performance of each task order are the property of the Department and must be submitted to the CO upon request. All documents produced are the property of the Government and cannot be reproduced, or retained by the contractor (excluding documentation that is intellectual property such as copyrights, software licenses, or patents in existence prior to being developed at government expense).

d. As OIG referrals contain personally identifiable information (PII), referral information is password protected and stored on a secured shared drive that requires FSA Finance Office approval to access. If any information is emailed to involved stakeholders, the information is

Winzipped and properly encrypted with a password prior to sending.

e. Contractor provided services shall be performed in accordance with the Statement on Standards for Consulting Services that is issued by the American Institute of Certified Public Accountants

(AICPA).

f. Performance of this task order shall occur between FSA’s Union Center Plaza location in

Washington, DC and remotely from the contractor’s offices.

g. Deliverables #1, #1A, #2 and #2A, may be consolidated into a single workbook, provided the workbook content is clearly labeled indicating to which deliverable number the content relates.

4.0 Place of Performance

Contractor personnel will be required to work on and offsite.

5.0 Security Requirements

The offeror staff shall be able to obtain a High Risk security clearance.

6.0 Service Level Agreement

SLA

Objective Measurement Standard/Period (w/disincentive

(if applicable)

Notes

1 Timely e-Qip submission.

Submit e-Qip form to the COR/ISSO within 24 hours of a contractor employee’s assignment to a Department contract and ensure that the forms are accurate and complete

(reference EDARS 3452.239- 72). (Time frame may change based upon Departmental policy)

Send a confirmation email to the FSA CO/COR/ISSO and Program Management by

5:00PM of the due date that certifies the success of complete, accurate, and timely clearance submission

95% complete, accurate, and timely submissions over monthly period

Period – Monthly Metric

Disincentive - $5,000 per 6C, $2,500 per 5C, and $500 per 1C over the standard in the reporting period

Example: For a contractor employee reporting for duty Monday, August 17, 2015, e-Qip initiation form must be received by 5:00PM of Tuesday, August 18, 2015.

2 Timely resolution of e-Qip information deficiencies. If any information on forms required by e-Qip are not complete or the submission is returned for any reason, the contractor must resubmit the forms to the COR/ISSO within 7 (reference

OM: 5-101) business days or the contractor employee must be removed from the contract

Send a confirmation email to the FSA CO/COR/ISSO and

Program Management by

5:00PM of the due date that certifies the success of timely clearance form re-submission or the removal of the contract employee from the contract

99% complete, accurate, and timely re-submission over monthly period

Period – Monthly Metric

Disincentive - $5,000 per 6C, $2,500 per 5C, and $500 per 1C over the standard in the reporting

3 Clearance Monitoring - When clearance information is returned with clearance type and date issued, monitor contractor employee clearance and employment status under the contract to ensure clearances renewals are submitted 30 calendar days prior to expiration, departed employees are identified and removed, and any clearance changes are annotated.

A consolidated report of all employees in the format shown below will be submitted to the

COR and ISSO (copy to the

CO) within 5 business days following each three month period of performance for identification of changes over the last quarter (new employees, employees with clearance in process (and status), change in clearance type, and resubmittals for employees 30 calendar days prior to clearance expiration and departed employees).

95% complete and accurate over quarterly period

Period – Quarterly Metric

Disincentive - $1,000 per error period

Submittal of quarterly report does not replace timely requests for e-Qip for new employees, monitoring status of clearance/clearance renewal requests, requesting clearance renewals 30 days before expiration, or notification that an employee has departed. COR will spot check quarterly and submit annually to the Security Office for a

100% validation when requested.

4 Timely Submittal of Clearance Renewals. EDARS 3452.239-72 requires contractor employees in

High Risk 6 (C) positions to submit clearance packages for re-investigation every five years.

Once a contractor employee receives their clearance, an issuance and expiration date will be provided back to the contractor for tracking.

Contractors must submit re-investigation packages to e-Qip

30 calendar days prior to clearance expiration.

A confirmation email to the FSA CO/COR/ISSO and

Program Management 30 calendar days prior to the Clearance expiration date that certifies the success of complete, accurate, and timely clearance re-submissions.

95% complete, accurate, and timely submission over quarter

Period – Quarterly Metric Disincentive - $1,000 per error e-Qip Report Heading